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(1) A lot people don’t understand that free-rider is a term of art within economics. Its a technical term, not a pejorative. Free riding is an economic effect, not a choice. In this context, there are many people who are eager to assume the burdens of child rearing but for a variety of reasons cannot. Morally they are not free-riders but economically they are. Every working person contributes to the economy to the benefit of everyone, but a free-rider problem occurs when a subset of the population shoulders the cost of a resource that is communally shared. I argue that is what has happened with child rearing.(2) Like the tragedy of the commons, free riding feeds on itself. In the tragedy of the commons, each individual tries to consume as much of the common resource as quickly as possible because they presume that everyone else will do the same. Anyone showing restraint will lose out. Free riding is the exact same phenomenon, except that instead of consuming a resource, people try to avoid expending a resource. Each person has a motive avoid paying because they presume that others are also avoiding paying. Anyone who does pay loses out. Over time people choose the free ride even if everyone knows, intellectually, that every one will be worse off for doing so. As the childless grow richer and parents grow poorer more people will choose to be childless.

(3) For purposes of this discussion, we should think of economically productive adults as being a commodity or resource which the economy must continue to produce in order to survive. Think of them as robots instead of human beings. The free-rider problem occurs because people who do not spend the resources to create the robots get to benefit from the robots’ output just as much as do the people who built them. In this case, where is the incentive to build robots?

(4) You can identify a free-rider situation by asking, “what would happen if everyone took the suspected free-ride?” If everyone maximized their own short-term economic self-interest and avoided the cost of child rearing, the economy would collapse. Conversely, if everyone contributed equally to the cost of child rearing it wouldn’t. Clearly, avoiding the cost of child rearing offloads an economic burden onto someone else.

(5) Many childless commentators think they should get credit for paying taxes to help raise children other than their own. However, paying taxes for other people’s children doesn’t have any effect on the free-rider problem unless the taxes completely flatten the differential between people of the same income potential who have children and those who don’t. To prevent the free-rider problem from occurring an individual would have to incur the same cost whether they had children or not.

Most childless commentators are seriously delusional about the amount of taxes they pay versus parents. They seem unaware that parents pay all the property and sales taxes they do and receive only trivial breaks on income taxes. The federal child-tax credit is a whopping $1000/year. The USDA estimates that it costs a middle-class family $170,460 to raise a child to age 18. So, even paying an extra grand a year in taxes, a childless couple would still come out $152,460 ahead.

If the childless couple invested the money that they saved every year by not having a child they could clear $215,396 after 18 years at a 4% return. So, parents come out $152,460 in the hole and the childless come out $215,396 ahead. Does anyone think that a delta of $367,856 won’t affect the choices that middle-class people make? That is not even counting the non-monetary losses in time and freedom.

(6) I am surprised at the number of commentators whose default view of children is highly negative. They seem to see nothing in children but criminals just waiting to put on enough mass to go on a real rampage.

(7) Even though about half of the negative commentators were screamingly hysterical that I was recommending that they all be marched off to the breeding centers, I made no policy recommendations. I am not even sure that any need to be made. I certainly have no interest in forcing people who do not wish to be parents to do so. I am concerned, however, that we are making parenting increasingly undesirable because it is so expensive.

If I had to recommend policy I would say that since we can’t really make children’s future income a form of property, the only solution is to reduce the cost of raising children, and I think the major costs these days come from collectivism. Socialist Europe and blue-zone America are the most child-hostile regions and they are also the most collectivist. Collectivism makes everything more expensive and more time-consuming to get, which drives the cost of child rearing that much higher.

Collectivism erodes the cultural underpinnings of successful parenting. Collectivism encourages individuals to think of themselves as consumers instead of producers. Collectivism encourages a play today, let somebody else pay tomorrow, mentality. Collectivism encourages people to think of life in terms of material rewards. None of these traits is conducive to the mindset of a successful parent.

(8) We all need to remember that economically productive adults don’t just happen. Parents invest a great deal of time and money to create them. However, in the modern era, parents do not receive any significant economic return. Parents benefit economically from the productivity of their adult children at about the same level as do total strangers who shared little in the cost of raising them. This creates a classic free-rider problem

The existence of the free-rider problem in child rearing should be a flashing warning signal to everyone that a potential problem does loom. We have a situation here where the production of the single most important resource of all (indeed arguably the only true resource), human minds, is being increasingly economically penalized. If we found a similar free-rider effect in any other economic arena we would definitely be extremely concerned.

[Update 2006-03-06 16:55:42: Just another attempt to clarify. The free-rider problem does not arise because of a conflict between subgroups within the population, in this case parents versus the childless, but rather between two CHOICES that INDIVIDUALS make, in this case to-have-children or not-have-children.

The free-rider problem arises when the ECONOMIC input of each choice differs but the ECONOMIC output is the same. In this case, the ECONOMIC input of the choice to-have-children is much higher than the choice not-to-have-children, even though the ECONOMIC output of both choices are identical.

An INDIVIDUAL, seeking to maximize their ECONOMIC wealth in the future should make the choice not-to-have-children. They are technically free-riders because they will receive the same ECONOMIC benefit from the next generation of children as an OTHERWISE IDENTICAL INDIVIDUAL who made the choice to-have-children.

The argument that parents derive great NON-ECONOMIC utility from their children and that this compensates them for their ECONOMIC losses in a MORAL sense is undoubtedly true to a great extent. It also completely irrelevant because the free-rider problem doesn’t deal with non-ECONOMIC utility.

The free-rider problem isn’t a statement about morality, politics or philosophy. It is a statement about how ECONOMIC inputs and outputs of different choices in certain specific ECONOMIC conditions effect human ECONOMIC behavior. ]

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96 Responses to “Family Free-Riders Part II”

Well put! I agree with most of what’s been said. I enjoy at change of perspective. Most of my initial comments were unwarranted if this was the original meaning.

I’m still reserved on the use of “free rider” in the context of systems you didn’t sign-up for. Since “free rider” is usually a term used in justifying policy, I don’t think I overreated too much when imagining you were going to price us for other people’s children. (I’m too young but I want to have tons of children. I’m not a children-hater, only a tax-to-equilibrium-hater ;-))

“The free-rider problem occurs because people who do not spend the resources to create the robots get to benefit from the robots’ output just as much as do the people who built them.”

As I noted on the other thread, the notion that people generally benefit *just as much* from children’s productivity (after they grow up) as their parents do is preposterous. Again, I put this question to you: do you seriously assert that people are going to be as generous to J. Random Stranger as they are to Mummy and Daddy?

“Many childless commentators think they should get credit for paying taxes to help raise children other than their own. However, paying taxes for other people’s children doesn’t have any effect on the free-rider problem unless the taxes completely flatten the differential between people of the same income potential who have children and those who don’t.”

In fact, a subsidy of whatever size creates a free-rider problem *in the other direction* — when John Doe only has to pay a fraction (even if it is 99.99%) of the cost of a given decision because the government will forcibly extract the remainder from Joe Blow, the former is a free rider upon the latter.

“So, even paying an extra grand a year in taxes, a childless couple would still come out $152,460 ahead.”

This $1000 figure is preposterously small — the school system alone (to take an obvious example of a free ride taken by the childbearing on the backs of the childless) can slurp that out of a typical middle-class taxpayer’s wallet in a month or two in these parts.

“I am surprised at the number of commentators whose default view of children is highly negative.”

That is a predicable result of your calling them “free riders”. (I’m afraid that your attempt to disclaim any perjorative implication is about as convincing as Mayor Nagin’s attempt to disclaim any racist implication in his famous “chocolate city” comment.)

I take issue the $170,400 figure to raise a child to 18. The middle class spends freely and this figure likely includes options and discretionary spending above what it takes to decently care for the youngster. I’m guessing that, for the general population (why would we limit ourselves to the middle-class in this discussion?), the figure is about half that cited for the middle-class when we get down to the necessities of raising a happy, healthy kid.

(The public contribution (educational expense) to raising the average kid -@ about $8000/yr./kid- would seem to be greater than parental contribuiton, if I am correct).

Some DINKs no doubt invest the delta but my understanding of the situation is that most of us don’t save very much. The likely reality is that the DINKS get the fancier (if not bigger) house, for example, and bigger property taxes. The fancier car, etc. which keeps the taxes and economy rolling.

I don’t think Shannon’s wrong, necessarily, but he is overstating the case quite a bit.

I am sorry if you are not familiar with the free-rider problem as a well understood economic and game theory concept. Here is a link to the wikipedia article on the free-rider problem that will prove a good starting place. Frankly, I just assumed that most people reading ChicagoBoyz would already be familiar with the concept. Sorry if I confused you.

The only way to understand the free-rider problem is to think of the case of two couples A and B with identical incomes. Couple A has children but couple B does not. Over the long term which couple will be wealthier? Couple B. Moreover couple B will get the same economic return from the children as their parents do i.e. by the children’s contribution to the general economy as adults.

The fact that couple B pays taxes to support children that are not theirs has no effect on the free-rider problem because parents must pay all the same taxes. The idea that the childless are somehow subsidizing parents would only be true if children produced some economic return for their parents.

Again, I put this question to you: do you seriously assert that people are going to be as generous to J. Random Stranger as they are to Mummy and Daddy?

People will be more generous to family than to strangers but the truth is that very little generational transfer of wealth flows from children to parents. People acquire wealth as they age so most parents, even those with successful children, are always more wealthy than their children.

In agricultural times, children used to contribute directly to the families bottom line for a decade or more before they established their own households. Now that is no longer the case. Children consume parental resources for 20 years or more before going out on their own. Once they are out on their own they don’t send home a check every month.

The fact remains that empirically the childless today have more disposable income and more opportunities to acquire wealth than parents.

As a conservative, I don’t want to overturn long-established social arrangements because some clever and probably self-interested person advances some interesting ideas on how society would work better according to their schema. Inevitably, such arrangements are useful for the person involved, but lack being useful for the great mass of society that is not like the peculiar person.

Thus, I favor continuing the protection of children by the whole of society.

“Free-rider” may be taken as a derogatory term, but in truth, its not. As Jeff Goldstein admirably fights for, interpretation of a word is not in the head of the listener. It is in the intent of the speaker. And the speaker has repeatedly stated this is a term of art in economics. And this is not a novel definition, he has cooked up.

So, this is a simple question of fact. Are you receiving benefits which you have not paid for? Yes, or no. If no, then you are not a free-rider. If yes, then you are.

Your desire for personal freedom, your quest for privacy, your personal situation, and even your lack of ability don’t really enter into this. For the last, I am personally sympathetic, its one of the great tragedies. But this is not about your desires, its about actions and physical consequences.

One note unrelated to the previous bit: I notice some on the anti side who seem to object to changing society to adjust to these realities. Yet, they are perfectly willing to let in widespread immigration to shore up the foundations they have helped erode. My query is, why are you more willing to accomodate foreigners and their desires for a society (for this is what you do when you let in large numbers of immigrants, you can’t help do otherwise), and not be willing to accomodate the desires of your fellow Americans.

Truly some orcs see an elflord in all his glory, and laugh to themselves how much better they are than that disgusting elf. And what the orcs don’t remember is that they are fallen, degenerate from the higher estate.

I don’t hold a soldier in contempt thinking him stupid. No, I see a man better than me in ways, at least. His patriotism exceeds mine. His bravery, his physical prowess also. He is more like an elflord than I, who is in this case, more orc-like.

And so it is with the single to the parent. It is a higher, more noble calling. Perhaps, you like me and the soldier are not fit to take up the mantle, but don’t lie to yourself that this is the nobler path you have taken. It takes great sacrifice to surpass the sacrifice of a parent, and unless I see you signing up for the nunnery, I shall be skeptical.

It should go without saying that some couples have fewer children than they would wish to, for biological reasons. Our daughter has four grandparents, but she is the only grandchild of any of them. We cannot have more children, although we would like to. Both my brother’s family and my brother-in-law’s family would love to have even one, but for various reasons, they can’t.

I suppose in a strictly technical sense we all count as free-riders, but it’s not for lack of trying.

Married people, no matter what their income, live practically tax free once their deductions are done. That goes even for ones that don’t own their own home. Single people, on average, pay twice the taxes, year in and year out, year in and year out, as do married people. I did the H&R tax cut software last year and found this crummy little fact out. It DOES NOT PAY to be single.

Shannon — I think there’s a seriously soft spot in your argument. If the cost of having kids is seriously impacting the decisions of potential parents, and if this is a serious problem, then why are the economically less well-off having more kids than the economically well-off? Presumably the poor would be much more put off of having kids (because they really can’t afford it) than the rich (who really can afford it). Yet that isn’t the way it’s playing out in reality. The poor go on breeding like rabbits, while the rich cut back on having kids. I think your model might want to take this into account somehow. It might also want to acknowledge the fact that the poor and near-poor manage to raise their kids anyway, despite not having hundreds of thousands of dollars to spend on every one of their kids.

Shannon — I think there’s a seriously soft spot in your argument….. then why are the economically less well-off having more kids than the economically well-off?

Posted by: Michael Blowhard on March 7, 2006 04:15 AM Permalink

Because they are crap at utility-maximization, why do you think they are poor in the first place?

I’m kidding. They probably derive a satisfaction-type benefit out of having kids (as I do from my one so far), the question is whether that benefit produces sufficient kids to keep society going (even with some immigration).

I think liberal, post-Christian societies that turn abortion into this cheap, socially acceptable
activity justified by the slightest economic disadvantage are asking for trouble if they don’t figure away to incentivize child-bearing at some point.

That was a chap called Lee Kuan Yew who proposed a vote-weighting scheme that gave those aged 30-40 extra votes and reduced those of the elderly and the too young (who were easily bought by benefits and too easily swayed).

Perhaps children should get their vote at 7 but let parents cast their vote – the political shift would push family friendliness back on the agenda (and give Mexican migrants some voice through their children’s vote).

On soldiers, if no one signed up, recruitment would drop and salaries would go up eventually.
With kids, there is no economic link beyond social values and biological impulse.

While I may benefit from the existence of “ex-children”, I pay for their services, so I’m not a free rider with respect to them.

As far as current children go, the childless do pay for some of their expenses. While parents may pay more, they clearly think that it’s an acceptable price. They’re getting something that they feel is “worth the money”.

> The only way to understand the free-rider problem is to think of the case of two couples A and B with identical incomes.

Only if you assume that having children is of no value, which is clearly false. Disagree? Feel free to advocate handing all children over to a state agency, paid for by all.

> The fact remains that empirically the childless today have more disposable income and more opportunities to acquire wealth than parents.

Suppose that there was a general tax to partially support Disneyland but folks who went still had to pay something for that privilege.

Clearly there’s no economic benefit to going to Disneyland and the folks who do so will have less opportunities to acquire wealth.

Yet, no one would argue that the folks who paid but didn’t go were somehow “free riders” just because the folks who did go pay more.

How so? I intended to demonstrate the gulf between the parents who end up with negative $152,460 and the childless who come out with a positive $215,396. The absolute difference between the two is $367,856.

If this is not what you meant provide more detail and I will correct the post.

“Here is a link to the wikipedia article on the free-rider problem that will prove a good starting place.”

The article defines “free riders” as “actors who consume more than their fair share of a resource, or shoulder less than a fair share of the costs of its production.”

For example, when “couple B pays taxes to support children that are not theirs”, couple A (the actual parents) are “free riders”, as they are shouldering less than a fair share (100%, since the decision and the custody are entierely theirs) of the costs.

“The fact that couple B pays taxes to support children that are not theirs has no effect on the free-rider problem because parents must pay all the same taxes.”

Irrelevant. As per the above definition, the fact that someone pays a fraction, but not the whole, of his fair share of the costs he creates does not make him any less a “free rider”.

“The idea that the childless are somehow subsidizing parents would only be true if children produced some economic return for their parents.”

Also irrelevant. Digging holes and filling them in again has no economic value; however, if I insist on having holes dug in and filled up in my yard all day, and I somehow make other people pay for it, I am just as much a “free rider” as if I’d actually gotten other people to pay for something useful.

then why are the economically less well-off having more kids than the economically well-off?

Well, it would be an argument if it were true that poor families are larger than wealthier families but that is in fact a misconception. Upper income families are still larger than lower income families although the gulf between the two is not as large as it was in the 1800’s.

We also have the modern phenomenon of single parent families failing down the income grade after children are born due to divorce. Children born into the middle-class slide into poverty after their parents split making it appear that the poor are having children.

We also have to consider that until less than 10 years ago, the government paid poor people to have children. That effect has still not worn off.

Simple. You are counting *not* having the money as a negative, and then counting the income produced from having the money as a positive. That counts the same money twice.

A simplified example that demonstrates the double-counting a bit more clearly: Joe Blow and John Doe each have $1000. Joe spends his money on those little robot pets; John invests it in something that earns $100. By your reckoning, John ends up $2100 ahead (Joe is $1000 in the hole, John is $1100 ahead, for a difference of $2100). The double-counting arises from describing Joe as “in the hole” *relative to John* and describing John’s wealth on an *absolute* scale, then adding the two measurements taken from different base points.

Married people, no matter what their income, live practically tax free once their deductions are done.

Heh, no.

The only deductions that count for the free-rider problem are those expressly linked to having children. Deduction based on simply being married don’t count because those effect parents and the childless equally. Deductions like mortgage payments also don’t apply because a childless person who owns a house also gets the deduction.

In any case, at least in America, only a tiny fraction of the income tax is spent on children. Property and sales taxes fund education and other local government services that children receive and parents pay those taxes at exactly the same rate as the childless.

In order to understand my argument, you can’t think of the division as being between two group, parents and the childless but between two choices that individuals make to become parents or to remain childless. In other words, everything will remain equal in the persons lives, their marital status, their career, their income etc except whether they have children or not.

Most of us childless-types who had comments in your prior thread had strong reactions to the uppityness of some of the posters, moreso than the reactions to your analysis.

Regarding your analysis – maybe us childless-types are free riders, based on the overwhelmingly socialistic scheme in this country today. The point is not to fault the childless, but to fault the system as a whole.

The original tone of the post may or may not have been intended one way or the other, but you should have expected some rather quick reactions just because it’s a touchy subject for a lot of us on both sides of the equation

“Property and sales taxes fund education and other local government services that children receive and parents pay those taxes at exactly the same rate as the childless.”

Which makes the parents free riders, since they are receiving all of the service but paying only part of the bill. At least, it does if we use the standard definition quoted in that Wikipedia article, not whatever idiosyncratic definition you are relying upon.

By your definition, someone who orders sirloin and champaigne and then splits the bill 50-50 with soemone who had bread and water is not a “free rider”. The absurdity of this conclusion speaks for itself.

“In order to understand my argument, you can’t think of the division as being between two group, parents and the childless but between two choices that individuals make to become parents or to remain childless.”

In the original post, you described “free rider” as an economic term of art. That usage is incompatible with the distinction you are introducing here.

Either you are using “free rider” as an amoral descriptor (in which case it distinguishes only between results, not between intentions), or you are attaching a moral judgment to it. Which is it?

I like wearing jewelry. Anyone who has been here any length of time knows that. Now wearing jewelry is a choice. So is having a child. I don’t have to wear an armful of silver bangles, but I choose to because I enjoy the sight, sound, and sensation of them. Now bangles cost money, even if they aren’t real silver. How would you feel if I received a five dollar a year tax credit for each bangle? That could be hundreds of dollars if I wear thin ones. No one made me wear them, and for genuine silver it wouldn’t “pay” me to wear them, but you are being forced to subsidize a choice that you don’t agree with?

Let’s go a little further though. Let’s say that you go out to a restaurant. You show up and there is a sign in the window saying “bangle-friendly”. You sigh and go in because you are hungry. You hear the jangling of bangles, but if you say anything, then you are an evil bracelet hater so you roll your eyes to your partner. The menu says that people wearing bangles eat for half-price. You pay full price which actually subsidizes me. Just for fun, I jingle happily through the meal causing you to have a difficult time conversing.

You go to work the next day. I come in fifteen minutes late and breathlessly exclaim that I had to put on my bangles and sorry I’m late. Oddly, I don’t have to note this on my time card, and when the end of the day comes around, I leave early because I have to get my bangles polished. Strangely, I never have to make up the time. You however have to cover my phone and finish the stack of items in my inbox. You leave half an hour late with no extra pay even though you did almost an hour more of work.

You go to the grocery store. You see half the aisles are dedicated towards the care of jewelry. Jewelry cleanser, products to make them shine, jewelry boxes, armoires, etc. You see me going to one part of the store and getting a free cookie. All people with bangles get a free cookie. You get your items and head to the checkout. You see me with a cartload of food and jewelry cleanser. I take out my food stamps. See, even though we earn the same amount of money, the government recognizes how hard it is to care for an armful of bangles, so they give me a couple hundred dollars of stamps a month. You see high priced items in my cart. There’s even the luxury jewelry cleaner you could never afford. You look at your generic brand foodstuffs and coupons and sigh. Remember, your taxes support me.

You decide to go on a vacation. You book a flight to some nice warm island. People with bangles fly half-price and get their bag of peanuts faster. You pay full fare, again subsidizing me. Yes, I heard about your plans and thought it would be fun. In anticipation I jingle happily for the entire three hour flight. You give me dirty looks, but I just smile vacuously and jingle.

The hotel says if I stay one night, I get another free. You pay full price. Subsidy. You know the drill. We go to a theme park. I get in half price. You don’t. The vacation ends. Time to go back to work.

We return to work and there is a promotion opening. We both apply. I get it, even though I do less work than you, constantly call off, come in late, leave early. Why? I have an armful of bangles to support. You with your bare arms are just rolling in money, so this shouldn’t bother you.

Even with all these advantages, I still complain about how hard it is to wear all these bangles because my arm gets tired, but even though my arm gets tired, my bangles are the best bangles in the world. See, I have pictures of them on my desk and I talk about them all the time, and you just wish I’d talk about the news, or the game last night, or something other than these damned bracelets. (Much like people on the board in real life I bet.) Despite my complaints, one day I come in and BOTH my arms are now bedecked in jingling loveliness. Lovely, you think.

Now do you get an idea? It’s not JUST taxes. It’s how a choice, one that I have chosen not to make, costs me every day, all the time in more than just a tax refund.I’m not the author, but I think this analogy is dead on.

I could try to explain the point of a society needing to support child-rearing, but others, indeed even myself, have done so already in great, and sometimes painful detail. If you don’t get it by this point, then you either don’t want to, or cannot get it, or just possibly, I am totally wrong-headed.

“The idea that the childless are somehow subsidizing parents would only be true if children produced some economic return for their parents. Also irrelevant”

No, it is the central point of my argument and the basis of the misunderstanding. If the question here was whether the childless were helping to maximize the pleasure that parents receive from having children you would have a valid point. The question that must be addressed however is not whether a parent receives the non-economic rewards of being a parent but if he come out economically behind, equal or ahead of an otherwise identical childless individual.

The “shared-resource” in the free-rider problem is not happiness that parents receive from having children but the future economic output of the child when he becomes an adult. In modern world, personal intergenerational flows of money are overwhelmingly from older to younger. Any parent can expect that they will spend far more money on their children than they will ever get back.

Institutional intergenerational flows of money, whether public or private, however, are largely from young to old. Take Social Security. (DON”T GET HUNG UP ON IT THOUGH AS IT IS MEARLY THE EASY EXAMPLE TO UNDERSTAND. THE SAME BASIC ECONOMICS APPLIES TO ALL FUTURE ECONOMIC INTERACTIONS!)

Sorry, where was I, Oh yes, Take Social Security. Future SS payouts to retires will come from paychecks of today’s children. The social security payouts are not effected by whether an individual had children or not. A parent, who spent huge sums of money on a child, and a childless stranger both have the same exact claim on child’s future social security tax payments. The parent receives no economic return from SS for all the time and money they spent turing a single cell organism into an economically productive adult.

Clearly, from the perspective of economic game theory. The best way for an individual to maximize their wealth (ALL OTHER VARIABLES REMAINING CONSTANT) is to avoid the cost of rearing a child in the short-term while collecting the economic benefits of the child as an adult in the long-term.

The free-rider problem also doesn’t require an all or nothing contributions. If the childless, pay 40% of the cost of raising children but receive 50% of the economic return whereas parents pay %50 of the cost but receive %40 of the return, then a free-rider problem will still occur. (Most real-world free-rider problems take this form. The progressive income tax creates a free-rider problem wherein people who don’t pay a proportional share of taxes are more likely to vote for increase spending and taxation.)

In order to torpedo my argument all you to show is that raising children will not make an individual less wealthy over the course of their life than remaining childless. If the same person would end up as or more wealthy with children than without then my argument would collapse.

“It’s all about me, the Religion of MS!” You know, as opposed to the Religion of US”–the collective. Of course, we all know where the Guardian stands in that schism. Ooops, promised myself I was letting this go. I’ve got a life to lead (that is, if the collective will give me permission).

“Institutional intergenerational flows of money, whether public or private, however, are largely from young to old.”

Did somebody figure out a way to “take it with you”? Or has the custom of burning the deceased’s worldly goods in a Viking funeral pyre become all the rage?

Obviously, practically 100% of the wealth of the older generation (parents and nonparents alike) flows to the younger generation, one way or another — if not through payment for services rendered during the former’s lifetimes, then afterwards. That cancels out any “free rider” issue, even if one accepts the original analysis — any supposed extra wealth of nonparents increases the final wealth of children generally, and thus contributes to the support of *their* children.

Whatever platitudes you might have heard, children are indeed our future. All of those ‘subsidies’ that you talk about are meant to help defray the cost of raising children. Apparently it does not do it sufficiently.

Imagine that there is a resource that is needed to continue life (which is indeed our prime directive as biological creatures). Say this thing is Corn. If people don’t grow corn, there will be no food, and people will starve to death.

So after about 3 months, if nobody grows corn, everyone is dead, goodbye human race. (In this example we are assume that corn is the only food, as children are the only continuation of the human race.)

So in this situation, the most just propositon, that is, the one that estimates the mean, wherein each social grouping of humankind is producing the share that is conisidered ‘fair’, which again is an amount of corn corresponding to their use of corn.

Say that growing corn takes a lot of time (takes away from the pleasure of living!) and costs a good deal of money, because perhaps corn seed, water, land, fertilizer, and pesticides are expensive.

Say for a moment, that at time T, each grouping of people is producing not just what they need but a small surplus. This is indeed the case with most things in a growing economy, as well as with a growing population– it creates more children than it needs to replace the dying.

After time T, certain individuals begin to discover that their production of corn, because of the interconnectedness between the human social groupings, has little to no effect on the availablity of corn. So they disconnect the notion of producing corn with the notion of continuing to live. Instead, they connect the notion of consuming corn (which they were doing anyway, but primarily they were producing it…) with living.

At this point, the arrangement is no longer just or fair. However, we should note that it is acceptable, and may still be considered just or fair if those individuals are for some reason unable to produce corn.

In fact, the surplus would exist to help defray the cost on society of those people who cannot produce corn. Such individuals should not be guilted for their lack of ability to produce corn– as an involuntary act we must not consider it unjust.

But those individuals who ‘take advantage’ of the surplus for their own gain will eventually eat up the surplus of corn (over time) and unless the corn producing individuals produce more corn (incurring more costs) to make up for this the societies (since i said they were interconnected) will eventually all become distressed because of the free-riders. In this situation, we are assuming that corn is not bought or sold, but distributed as needed. If corn is bought or sold then the issue is not the same. It is in this case a shared resource.

Imagine the same situation, but with the 3 months deathtime being like, 120 years, and the corn being children. Obviously there are differences, but we can see that while if we subsidize the creation of corn by giving special deals to corn-producers it will make life less enjoyable for non-corn producers, some non-corn producers wanted to not produce corn so they could enjoy life more, right? So that balances off. Too bad for them.

Like I said, those who do not produce corn because they cannot are easily as just (fair) as those who produce their share of corn.

Also, people who are ‘lazy’ and not because they can’t, but because of whim, decide to produce LESS corn, because it costs them money and as a shared resource there is no direct return other than being able to consume your own corn (I.E the small benefits parents get from children in our society- companionship, someone to drive them to the doc’s office when they can’t drive, etc.)

This goes a little further and almost says, ‘You aren’t having ENOUGH children!’

I digress- my point is not to suggest that we force people to produce corn (or have children as the case may be) but like all true philosophical discussions, a moral dilemma has been brought up for which all parties involved are to meditate apon.

A few things:
1. Just because you pay taxes, some of which help support children, does not mean that you are sharing the load at all. That’s like saying you contributed to public safety by not going to jail. Sure, if you had not paid taxes, or gone to jail, it would have had a negative effect (thus in a sense you are, by not doing so improving things) but the fact you are claiming that your abstaining from this as positive is more of a threat and an excuse than anything else.

2. Any solutions to the growing problem of having enough children to support a society that involve 1. forcing people to have children or 2. forcing people not to have children are in and of themselves highly suspect. In fact, a solution which FORCES a citizen to do ANYTHING is in and of itself suspect. Aside from paying taxes (which is the contract we sign by being born a citizen) and dying (the other contract we sign at birth) there should indeed be nothing we are forced to do.

This of course is not always the case.

For a solution, I would suggest that the government continue to act in the best ways of the American tradition– that is, offer incentives for positive behavior and disincentives for negative behavior. The key trouble is and has always been defining correctly the positive and negative behaviors. Since government is political, politics will often inform and define these supposed ‘goods’ and ‘evils’. Corruption could easily (and has) destroy any attempt to improve this situation.

Also, it seems to me that the only stable society is the one that is steadily growing. If we address the problem of birthrates/parenting, then we will eventually be scheduled to deal with the problem of where people can live (as China has.)

My hope is…
1. We will confront and not ignore these problems
2. These problems will NOT be ‘solved’ in a collectivist, coercive manner.

The trouble with arguments like these is that they can be used to justify pretty much any kind of transfer payment. For example:

I want the government to subsidise my gym membership. What? Society gets a benefit from my being fit. I’m less likely to suffer from heart problems, which means not only will I not be a drain on the healthcare system, but I’ll likely stay economically productive much longer than the unfit. Why, if nobody went to the gym we’d all be a bunch of lard-assed layabouts, and nobody would ever get anything done. Society would collapse. If you think about it, I’m actually subsidising the rest of you idle parasites! You owe me, I’m just collecting what I’m due!

And so on and so on. Pretty soon you get a society that’s fiscally micro-managed on the basis of officially favoured and officially unfavoured lifestyles. Is that really what people on this blog want? This must be some new definition of “libertarian” that I hadn’t previously encountered.

“In order to torpedo my argument all you to show is that raising children will not make an individual less wealthy over the course of their life than remaining childless.”

That’s actually quite easy to do, given that you specifically excluded emotional rewards from the benefit ledger*.

If Joe Blow spends $180,000 to raise a child to adulthood, and John Doe (otherwise identical) spends $180,000 on eighteen years of haute cuisine, both end up with the same wealth (since, again, you have specifically exlcuded the issue of how much enjoyment each derives from the expenditure).

*”If the question here was whether the childless were helping to maximize the pleasure that parents receive from having children you would have a valid point. The question that must be addressed however is not whether a parent receives the non-economic rewards of being a parent but if he come out economically behind, equal or ahead of an otherwise identical childless individual.”)

Now, you have opened up another load of arguments in your corn example.

Say, instead of producing corn, you decide to produce fertilizer (insert joke about this conversation deteriorating into fertilizer here). It would take you only 4 hours per day to produce the fertilizer instead of the 8 hours per day to produce corn. In turn, the fertilizer you produce reduces the production time of corn to 7 hours a day. Someone else sees this and decides to join you in producing more fertilizer. This additional fertilzer would reduce the corn production time to 6 hours a day. Someone else sees that your fertilizer production reduces corn production time and he, however, decides to continue working 8 hours a day to produce more corn in exchange for more fertilizer which enables him to produce more corn. And this exhange goes on and on. The goal here is to make sure we have a proper balance between corn and fertilizer production. Shannon seems to think that fertilzer production is now too attractive and we are not producing enough corn and therefore wind up deep in fertilizer if we don’t produce enough corn. So, the question remains, what will make corn production more attractive without causing a boycott of fertilizer production?

xj goes for the reductio ad absurdum. If you cannot see the yawning chasm in importance to society between reproduction and the ridiculous example you give, you’re not fit to talk about or have opinions on serious matters. Leave the grown ups to their discussion, ok?

The wealth problem- $180,000 of Haute cuisine– is assuming that we are spending the money we don’t spend on kids.

The idea, in the minds of the educated, is that the money we ‘save’ is going to sit around and grow, not that we are going to spend it. You are correct in noting that it will probably just be spent, but not having children because of the extra 300k you’ll have per child is not necessarily done in the mind that it will be spent (in which case it would only amount to the amount not spent on kids, roughly 180k.)

When a store gives us 50% off, they know we think, ‘wow, I can buy x and save y dollars!’ What they know, and we really should know, but never think about, is that those y dollars are actually going to be spent. Probably on another x.

Raising children could make a family/person more wealthy, but it all depends on how the children are raised. The state is extending and extending its attempts to raise our children for us, in every way but footing that 180k.

Emotional enjoyment of children is not a sure thing. In fact, depending (like I said) on how a child is raised, having children may completely ruin you emotionally. The issue of mass media spreading and controlling common feelings and ideas about children and the emotional effects thereof suddenly become an issue (part of the reason that I’m assuming Shannon disregarded it.)

Between Joe Blow and John Doe; we’re assuming that John Doe will spend his money and not invest it. If like I said earlier Joe and John are educated (like most people in the USA) John will not be motivated to have or have no children depending on the idea that he is going to spend the money. He more than likely WILL spend the money, but would not have planned to. So he gets the illusion of saving money/gaining money in the long run, but in fact he gains nothing.

So in a sense, education is working against us in a particular, limited way.

> The question that must be addressed however is not whether a parent receives the non-economic rewards of being a parent but if he come out economically behind, equal or ahead of an otherwise identical childless individual.

No, that’s not the question. There are lots of things that people can do that put them behind economically. That fact alone doesn’t justify subsidizing them.

Of course, if you’re going to ask me to pay for something, I’m going to want to control said something. The more I pay, the more control.

Shannon seems to think that parents should pay the same as non-parents for child-related costs. Okay. That means that non-parents get the same say, the same custody, etc.

What? Non-parents shouldn’t have any say on non-economic issues? Why doesn’t my disneyland habit get the same deference?

I note that Shannon “forgot” to mention that many child-related expenses are not taxed.

Also, Shannon “forgets” that we pay ex-children for their output, which pretty much guts the “parents are providing a resource” argument.

There may be an argument that children owe parents, but that wouldn’t advance the now-apparent goal of giving parents even more money from non-parents.

Who left you in charge of this blog? That was a perfectly civil and rational argument. You might not agree, but so what? Don’t take it upon yourself to chase people away from here.

Personally, I found xj’s argument interesting. If you disagree, argue on the merits. Lots of blogs tolerate rudeness, we generally discourage it. It’s not helpful, it doesn’t add to the debate and it’s not necessary.

Mishu: It is a very good example. But that would mean that some people would need to be producing more corn (children) such is not the case.

Immigration is a solution to this problem, but it is a poor one overall, because it introduces many new problems, and relies on the overproduction of other nations, which are themselves developing, and in the future will reach most likely a state similar to ours. I guess we’ll be getting China’s extra people, eventually?

But you are right, though, it is a good point. An ideal situation would be that those who desired to have kids could have them and those who did not could decline to, and we would still have a positive balance. I think Shannon’s point is simply that we have a nasty negative incentive going that will appeal strongly to the educated, money-conscious (albeit not particularly wise) person.

About going to the gym – you have colored an otherwise reasonable example negatively with your use of pejorative.

How about we take your example are re-word it?

The government should subsidise my gym membership. Why? Society gets a benefit from my being fit. I’m less likely to suffer from heart problems, which means not only will I not be a drain on the healthcare system, but I’ll likely stay economically productive much longer than the unfit. If nobody went to the gym we would become chronically overweight, unfit and unhealthy, and it would make our production, which is our wealth, sluggish as well. Society would collapse. If you think about it, I’m actually subsidising the rest of society by staying fit. All I am asking for is some compensation.

In other words, I see nothing in your example that holds water other than an effective use of pejorative.

I think this is completely beyond the scope of what Shannon was talking about, really…

I did not make any of the POLICY recommendations you attribute to me. I have not made any specific recommendations at all. You are clearly projecting onto me the solutions you imagine I would advocate. You are however, far off base.

Please don’t attribute to me things which I have not said again or I will delete your post.

More parents choosing not to have children increases the cost of future goods and services. That resulting price effect reduces welfare of older generations because they will now pay higher prices (and likely consume less). Not a big deal; this is just the way inter-related markets work and this is a classic case of a price-induced externality. You have not yet identified a real (in an economic sense) market allocation failure.

If Joe Blow spends $180,000 to raise a child to adulthood, and John Doe (otherwise identical) spends $180,000 on eighteen years of haute cuisine, both end up with the same wealth (since, again, you have specifically exlcuded the issue of how much enjoyment each derives from the expenditure).

Your counter example does not apply because John Blow has made one economic decision and John Doe has made two. John Doe has first decided not to have children and then made a second independent decision to spend the money on haute cuisine. The second specific decision is in no way related to the first.

The only decision of interest here is whether or not to have children. All the other thousands of economic decisions in our lives simply don’t count in this limited scope.

“Obviously, practically 100% of the wealth of the older generation (parents and nonparents alike) flows to the younger generation, one way or another — if not through payment for services rendered during the former’s lifetimes, then afterwards. That cancels out any “free rider” issue, even if one accepts the original analysis — any supposed extra wealth of nonparents increases the final wealth of children generally, and thus contributes to the support of *their* children.

Economic return to children will not effect the free-rider problem because the free-rider problem is all about the economic return to the actual decision maker. I might get some sort of mental happy from knowing that my decedents will eventually acquire whatever wealth you did not consume while living but that amorphous return many decades hence will not influence my economic behavior here and now.

You keep thinking about this problem like its an economic version of a cosmic karmic wheel balancing. Its not. Rather it is how the current economic structure creates an incentive around one specific question, whether an individual should have children or not.

After reading the update, we’re back at the problem I noted above: Joe Blow who spends $180k on childrearing and John Doe who spends $180k on fine dining are equivalent — Joe is a “free rider” for the *economic* benefit of maintaining employment in the restaurant industry to precisely the same degree that John is a “free rider” for the *economic* benefit of adding another (presumably productive) adult to the population.

“Your counter example does not apply because John Blow has made one economic decision and John Doe has made two. John Doe has first decided not to have children and then made a second independent decision to spend the money on haute cuisine. The second specific decision is in no way related to the first.”

Life would certainly be much easier if my decision to spend money on X were decoupled from my prior decisions not to spend that money on Y. Alas, it doesn’t work that way in the real world.

Obviously, *both* characters in my example have made two decisions (to spend money on the one thing and refrain from spending it on the other).

“The only decision of interest here is whether or not to have children. All the other thousands of economic decisions in our lives simply don’t count in this limited scope.”

Attempting to exclude factors outside of an artifical framing of the question leads to all sort of error. To take one obvious example from economics, it is the key to the “Broken Window Fallacy” (if your reply to the question “How would the shopkeeper have spent that money if the window hadn’t been broken?” is to declare that these alternatives “simply don’t count in this limited scope”, then you are just not going to understand why it *is* a fallacy).

Whether or not I agree with your post, I think that a lot of the commenters forget that this is your blog and your opinions. I think if you elucidated more on the benifits that the childless adults gain from the next generation your arguments would be much stronger. The fact that people don’t like social security and the social safety net might be a reason not to, however, there is no doubt that adults- childless and withchild alike benefit from the taxes taken from the society as a whole which in turn benifits them. The lack of social security and such would leave the US like the non-socialist countries out there… um which I don’t know well enough to argue.

Most of the criticism I’ve read are off topic. Non economic. There -should- be more help raising children just from the standpoint that childhood affects adulthood. I don’t think that you can argue against it from that standpoint.

The possible economic arguements/criticisms that I see is that 1) doesn’t the number of jobs/employment affect this? You made the point with respect to the argrarian societies, I am unsure that all the parallels transfer to modern society with less manufacturing jobs and less agriculture. Taking the extreme method that you used, having everyone making lots of babies so that there is raging unemployment and therefore a need to either overtax everyone or make welfare worthless also seems like something that wouldn’t work from an economic standpoint either.

“Taking the extreme method that you used, having everyone making lots of babies so that there is raging unemployment and therefore a need to either overtax everyone or make welfare worthless also seems like something that wouldn’t work from an economic standpoint either.

I didn’t use any extreme methods nor did I make any specific recommendations. My original post made two points. (1) That child rearing in the modern world had developed a free-rider problem and as such (2) people who were childless should think about the implications of that and at the very least not be disrespectful of parents.

Now this has turned into some kind of death march to educate people on exactly what the free-rider problem.

I agree with much that is written above and here are these same arguments organized into marginal endorphin theory. According to this theory,
the free-rider problem is temporary and will disappear in 20 years.

Here is an A Generally Accepted Hypothesis:

A person’s behavior is largely determined by the amount of endorphins that behavior produces. Of course avoiding fear, pain, hunger, thirst and lack of sleep is a powerful motivator. The amount of endorphins the body awards each type of behavior is determined by DNA.

Here is a Truism:

People who do not have children will not pass their DNA on to their children.

Here is an observation:

People who raise children until the children are old enough to reproduce and who then help in raising grandchildren probably get so many endorphins that they love what they are doing and will continue to do it as long as the endorphins gained from child rearing are greater than those they can get from any alternative source.

The free-rider who elects not to have children or to care for children is probably a person whose DNA has omitted child care as a source of endorphins.

There are alternative sources of endorphins: some are television, music, movies, sports, travel. All can be enjoyed without children – and this enjoyment produces endorphins. But, these sources can be enjoyed with children and each child’s enjoyment adds endorphins on top of the endorphins already gained from the source.

Here is a Conclusion:

The DNA of childless people will soon pass from this Earth.

Childless free-riders will not be an historical force nor will they ever be a footnote. History will be written by that part of our society that is both able to have the most children and, at the same time, able to convince the rest of society to help raise their children until the children are old enough to reproduce.

Here is a suggestion:

Perhaps economists ought to replace the word “utility” with “endorphins” because endorphins can be quantified. One can build a magnificent economic structure based on “marginal endorphins”.

“Most real-world free-rider problems take this form. The progressive income tax creates a free-rider problem wherein people who don’t pay a proportional share of taxes are more likely to vote for increase spending and taxation.”

This, obviously, is the form of the real-world free-rider problem of parents vis-a-vis nonparents (the various subsidies for education, etc paid by the latter for the benefit of the former).

Okay, your problem is that you see this as MORAL issue. You think that I am calling the childless a bunch of leaching slackers. This outrages you. You have gone a crusade to prove that the childless are AS A POPULATION pulling their fair share of the weight IN THE NET ECONOMY.

What you can’t seem to understand is the state of being a free-rider isn’t an all or nothing MORAL description of a person. Any given individual could be a free-rider in one part of their economic life and an over-contributer in another. It doesn’t matter what an individual’s net contribution is but only how the particular conditions influence one particular economic choice.

I made two arguments that still stand (1) everyone will derive virtually equal ECONOMIC benefit from any particular child’s future productivity regardless of the degree of which they contributed to the support of the child and (2) parents must invest far more ECONOMIC resources in children than the childless.

The difference between inputs and outputs creates a free-rider problem in child rearing which in turn creates an incentive for people not to have children.

[Update: some weird quirk caused this post to be displayed previously as authored by steveB. I have corrected it]

> It also completely irrelevant because the free-rider problem doesn’t deal with non-ECONOMIC utility.

Except that it does. Non-economic utility causes people to do things with economic consequences, such as have children, go to disneyland, etc. People are not wealth-maximizers. (Interestingly enough, a large fraction of the economy relies on “inefficient” consumption.)

Shannon needs to ignore non-economic motivation because it causes people to create children even though his analysis “proves” that they won’t.

If Shannon wants to argue that the non-economic benefits aren’t motivation, he can’t object to eliminating them. If I’m going to pay, I’m going to control. And I’m going to pick and choose among the available suppliers. That shouldn’t be a problem if non-economic factors are as irrelevant as Shannon’s argument requires.

While Shannon insists that he’s not advocating additional subsidies for the economic costs of children, his arguments are exactly the same as folks who do. He stops before presenting the bill, and threatens people who point that out.

I have never argued that non-economic benefits don’t motivate people to have children I simply have pointed out (ad nauseum) that they do not effect the free-rider problem I identified.

I never asserted that I had listed all the reasons people do or do not have children. I merely asserted that strangers get the same economic return from children as do parents even through the strangers may have invested nothing in the child’s rearing. It is that condition and that condition alone that creates the free-rider problem I identified.

Child rearing could also be infested with a tragedy of the commons, a broken window fallacy or multiple other free-rider problems but none of those would invalidate the existence of the free-rider problem I have outlines.

You are running on pure stereotype. You obviously have never read any of my other postings or you would know how far off base your insinuations are.

As long as you clearly label your imaginings of my positions as such you can say whatever you wish but make a statement of fact that I have said something I have not and I will yank you.

> I have never argued that non-economic benefits don’t motivate people to have children I simply have pointed out (ad nauseum) that they do not effect the free-rider problem I identified.

Except that the non-economic benefits do affect the free-rider problem in that they significantly reduce the impacts that Shannon decries; parents know that children cost money and they still have them. They believe that the non-monetary benefits that they receive are worth the economic costs that they incur.

Note that, to first approximation, the rest of us do not receive the non-monetary benefits. Also, we do pay for our interactions with ex-children.

> You obviously have never read any of my other postings or you would know how far off base your insinuations are.

Unless Shannon is claiming that other postings somehow change what he’s written on this topic under Part I and Part II, he’s wrong.

Under those postings, he has trotted out the stereotypical justifications for taxing free riders with the exception of presenting the final bill. If that’s not the argument he wants to make….

If he disagrees, perhaps he’d be good enough to quote the part of his free rider discussion that is not a definition, part of the stereotypical justification of subsidies, or some variation on “I haven’t proposed resource transfers”.

I am unpersuaded that the Free-Rider Problem Shannon identifies in the technical sense is a “problem” in the everyday sense. It seems to me that there are a class of things we must rely on people to do for non-economic reasons. Soldiering comes to mind. Scientific research comes to mind. Society would surely have problems if we had no soldiers or scientific researchers–or (little better) if we only had those who did it for the money. We rely on our countrymen’s sense of duty to provide us with soldiers; we rely on our intellectuals’s love of truth to provide us with researchers. There are economic benefits to taking up such a profession, but those aren’t what provide us with enough people of those sorts.

I think parenting is like that, too. Like researching or soldiering, it demands so much self-sacrifice and effort that offering an economic incentive to do it is only going to tip the scale so much. If people weren’t doing it for other reasons, society would be sunk–we just couldn’t afford to pay enough people to be parents.

People become parents for any number of non-economic reasons: desire to create a family, desire to have someone to love, a deep belief that it’s one of the things in life that’s worth doing. These reasons swamp the economic concerns. They have to, when you think about it–being able to afford a bigger house doesn’t benefit you that much if you know your kids are going to tear it up. We have to rely on the non-economic motivations people have to make them parents.

Now, if people no longer had those non-economic reasons, or if those reasons are swamped by economic concerns, then the technical free-loader problem will become a genuine problem. And indeed, to judge from this thread, that does appear to be the case for some. (Apallingly, it appears that some folks do not seriously morally distinguish between raising children and wearing jewelry!) If that’s truly widespread, then finding enough parents to raise another generation is going to be tough, and the economics of the whole thing will only worsen that. But this is primarily a cultural effect. The economic effect is a distant secondary.

Someone earlier noted that the poor bear more children than the rich. This bears out the sense I have that the economics are not a significant factor. If it were, the poor would forgo having children more than the rich. Where great self-sacrifice is needed to accomplish something, I doubt economics–with its assumption of universal hedonism–can really explain why people do it, or help matters if they don’t do it enough.

Part of Shannon’s original point is valid: people who bear children are worthy of respect because they bear a burden for all of society, and people who don’t bear children benefit from that for free. But this is an artifact of a much larger system–people who are nuclear physicists bear a burden for all of society, too, and even people who don’t directly use their research benefit from the more efficient economy they help produce. But we still have parents and we still have nuclear physicists. In the end, it really isn’t the economics that makes those systems run. I don’t fear that “Like all free-rider situations, this one will eventually cause a collapse that hurts everyone.” The economics, while interesting, are not severe enough to be the dominant factor.

Here is a Conclusion:The DNA of childless people will soon pass from this Earth.
Childless free-riders will not be an historical force nor will they ever be a footnote. History will be written by that part of our society that is both able to have the most children and, at the same time, able to convince the rest of society to help raise their children until the children are old enough to reproduce.
(Slightly OT but…) I’m afraid that this is just wishful thinking on your part. I’m childfree. As is the case with almost ALL the other childfree people I’ve ever come across, my parents were not. That being the case, please explain how the desire to be childfree is hereditary.

“I have never argued that non-economic benefits don’t motivate people to have children I simply have pointed out (ad nauseum) that they do not effect the free-rider problem I identified.”

They most certainly do affect this “free-rider problem” in a most fundamental way — they determine whether or not it is even worth worrying about.

For example, the classic example of the free-rider problem (national defense) is an issue because experience has shown that few people will voluntarily support it just because they feel patriotic. Thus, it’s necessary to make people pay taxes, pay them to serve in the military, and/or conscript them.

On the other hand, experience does *not* show this to be a problem with childbearing. (The fact that fertility rates are lower than some people would prefer does not constitute convincing evidence to that effect.)

That being the case, this “free-rider problem” is similar to the “free-rider” problem of sustaining the culture (artists, writers, etc foot all the bills for paint, paper, etc) — technically, one can argue that the problem exists; as a practical matter, it doesn’t.

They most certainly do affect this “free-rider problem” in a most fundamental way — they determine whether or not it is even worth worrying about.

The existence of a free-rider problem is always worrisome because like the tragedy of the commons its sets off a feedback loop. A small problem can grow very large in short period of time.

As a matter of empirical fact, the economic cost of raising children does figure highly in studies of why people choose to have children. The per capita cost of raising children has risen steadily throughout the industrial age and the birth rate has fallen largely in synch. Your own arguments are based on the idea that children represent a kind of consumable good which parents buy. As the cost goes up, they buy less. If you add the free-rider effect on top of high cost that just makes the problem worse. No one likes to be played for a sucker.

In any case, I never asserted that we had a “problem” with our birthrate. The point of my original post was that parents expend significant resources in terms of time and money rearing children who as adults produce a significant economic benefit to the childless. I pointed out this was a classic (economic) free-rider problem in the strict technical sense, which it is. All I asked was that the childless should at least acknowledge that parents are doing vitally important work that benefits everyone while receiving no economic return for it.

The post was prompted by an observation that the pejorative “breeder” had moved out from the gay subculture to be adopted by the more radical childless. In my experience such people tend to be childish, self-rightous narcissist who believe that they pull the entire world behind them in their wake. I derive great pleasure from tweaking them by pointing out that they are economic free-riders and “parasites.”

I have no problems at all with people who remain childless for whatever personal reasons they have as long as they don’t lash out at parents and children because the work of creating the next generation and sustaining civilization has somehow inconvenienced them for five minutes.

“The post was prompted by an observation that the pejorative ‘breeder'”

Pejorative? Where ever did you get that notion? It’s simply a technical term of art, like “free rider”.

“I derive great pleasure from tweaking them by pointing out that they are economic free-riders.”

Oops… it seems that I picked a bad example. In my defense, I point out that I depended upon *your* assurance that the term “free rider” was not a pejorative. Please make up your mind on this point and let us know.

“I have no problems at all with people who remain childless for whatever personal reasons they have as long as they don’t lash out at parents and children because the work of creating the next generation and sustaining civilization has somehow inconvenienced them for five minutes.”

If I met such a person, I would hope that he’d share the secret of how he recoups the various subsidies he pays for other people’s children with five minutes’ work.

That said, I note that such subsidies are the mechanism through which collectivism breeds (pardon the pun) such attitudes, and that repeal thereof is the most promising avenue toward changing such attitudes.

“If the childless couple invested the money that they saved every year by not having a child they could clear $215,396 after 18 years at a 4% return. So, parents come out $152,460 in the hole and the childless come out $215,396 ahead. Does anyone think that a delta of $367,856 won’t affect the choices that middle-class people make? That is not even counting the non-monetary losses in time and freedom.”

You need to count the non-monetary losses. Say a child takes an average 2 hours a day in extra work from each parent over 18 years (a WAG based on having a 9 year-old son; it might be more).

At $20 an hour, that’s over $500,000 in foregone income (or leisure value) over 18 years for the two parents. Feed that in at 4% compounded and see where your delta gets.

On the other hand, I bet if you take a large group of 75 year-olds, equally split between parents and childless, and ask them respectively if, as they near the end of life, they’d

1. Give up having had kids for the additional money/time/vacations/experiences they could have had

2. Give up their extra mill in the bank and the cars/vacations/etc. they got to experience and have the kids after all

proportionately many more parents would tell you it was worth it and be satisfied with their choice.

I have to say that I like your second post on this issue much more than your first. I agree with you that socialistic economic policy has radically increased the cost of having kids to the point where many refuse to do it. Steve Sailor has made the same point in his treatie, Affordable Family Formation, which I think is spot on and the most intelligent comment about the issue in the last 10 years.

The killers of family formation are the unholy trinity of housing costs, medical costs, and enducation costs. All of these costs have been exacerbated by socialistic economic policies.

Bob Toll (CEO of Toll Brothers, a luxury home builder) believes that the price of housing in the U.S. will approach that of European prices. He believes this is largely drivin by more and more building restrictions, particularly in the blue states, that reduce the supply and, thus, increase the cost of housing. If his predictions are correct (and I think they are not, but thats for another day’s discussion), then we can expect zero population growth, REAL FAST.

I disagree with your notion that America is becoming child-hostile. I think most of the U.S. is very child-friendly. Go to places like Phoenix, Dallas, Las Vegas, and Boise and you will see that plenty of people are having kids. Granted, places like the Bay Area, Boston, and Seattle are becoming child-hostile. However, this is largely due to the huge cost of living in these places more than anything else. Same for much of East Asia and Western Europe.

A free market economy with lots of economic opportunity with low prices for everything will do much to eliminate any potential “birth dirth” we may have.

I point out that I depended upon *your* assurance that the term “free rider” was not a pejorative. Please make up your mind on this point and let us know.

Free-rider is a technical term. Parasite is a pejorative. People can become free-riders though no choice of their own. Free-rider effects evolve within economies purely on their own with no human choice involved whatsoever. People who are snotty about the free stuff they receive, however, deserve the pejorative.

I will make a deal with you. I will forfeit all the lavish subsidies you image I receive for being a parent if you promise to pay all my cost of rearing a child when you eventually need that child’s labor in the future. After all, that is the same deal you would expect if you could buy a machine to perform the same task.

I expect to paid for my time as well, plus interest.

So, when your business needs to hire a new employee they will need to pay the full cost of raising that child to adulthood to the point they can do the job, whether that is burger flipper or a doctor. For a buger flipper, I would say you looking a conservative $300,000. For college material, over $500,000 and a doctor is going to really set you back.

This is all in addition to the operating cost of my kid i.e. his salary.

Now I do derive great satisfaction from being a parent but just because I enjoy my work doesn’t mean I don’t want to be paid. Business is business and I know you are very keen to carry your own weight in the economy. Besides where am I going to get the capital to fund that grandchild project whose output you will also need assuming you haven’t just blown an artery.

Have your lawyers call my lawyers and we will ink the deal. I will scramble to dig up the extra cash to raise my kids and you can start saving up like crazy because baby its gonna hurt come my pay*day.

“People who are snotty about the free stuff they receive, however, deserve the pejorative. I will make a deal with you. I will forfeit all the lavish subsidies you image I receive for being a parent”

Er, you might have wanted to put a bit more padding between declaring “X deserves to be insulted” and declaring “I am X”….

“if you promise to pay all my cost of rearing a child when you eventually need that child’s labor in the future. After all, that is the same deal you would expect if you could buy a machine to perform the same task. So, when your business needs to hire a new employee they will need to pay the full cost of raising that child to adulthood to the point they can do the job, whether that is burger flipper or a doctor. For a buger flipper, I would say you looking a conservative $300,000.”

You’re cranking out a kid who will accept under $10k/year ($300k over a 30+-year working life) to flip burgers? Hmmm… maybe I’ll take you up on that deal before you come to your senses.

(Of course, the *real* deal you’re offering — that $300k is the cost of an upper-middle-class upbringing of the sort typically ending in a career well above the burger-flipping level; the cost of raising kids who end up on the latter track tends closer to $100k — would be better still.)

“This is all in addition to the operating cost of my kid i.e. his salary.”

Nope. You already got caught double-counting money once (item 5 in the original post); you ought to know better than to try the same prestidigitation again.

“”Under those postings, he has trotted out the stereotypical justifications for taxing free riders with the exception of presenting the final bill. If that’s not the argument he wants to make….”

“He’s said multiple times that it’s not.”

And yet he pretty much rejects out of hand the arguments for giving up the existing redistributive taxes on the people he describes as “free riders”, going so far (3/8, 01:16 PM) as to suggest willingness to give up the resulting subsidies only if a larger (100%) subsidy is offered in their place.

You assert that parenting is basically an extremely expensive and time consuming hobby. You are angry that you are forced to subsidize my hobby.

Fair enough.

Hobbies are all well and good but at some point they become so expensive you start thinking about turning them into a business. I write software for fun and let people use some programs for free but once a program passes a certain size it starts being a lot of work and I start thinking about charging for it.

I enjoy parenting immensely but my cost are going up and I don’t know if I can continue the two projects currently under development if my cost suddenly go up. I know for sure that I couldn’t have started these projects under the new rules. (Well, I could have but the quality would have been lower and there would have been more “wastage”)

So myself and all the other parents in the world, are going to turn our hobby into a business. We are facing huge financial outlays and we need a way to recoup those. Heck, most people start the entire production process when they are young and just starting out economically. Where are they going to get the capital needed to bankroll the project? We’re not subsidizing them anymore. They will have to pay education, housing, medical etc all up front as project matures. They’re going to have to borrow a butt load of money so why shouldn’t they get to recoup that?

You think that the salary you pay my child is fair compensation for my work but you forget that I have no legal claims on that money. I don’t get any kind of reimbursement at all from that. Children don’t send home checks anymore.

as to suggest willingness to give up the resulting subsidies only if a larger (100%) subsidy is offered in their place.

It’s not a subsidy. I don’t ask for anything up front. I just ask to be paid for the time and resources invested in the product. Surely, you wouldn’t demand that I write software for you for free so why do demand that I create employes for you for free? You expect me to spend hundreds of thousands of dollars, a minimum of 157,000 man hours and commit for a minimum of 18 years and to then give away the product of all that work for free?

Screw that.

People like you have benefited from hobbyist such as myself because we have been more concerned about the quality of our art than in monetary return. Under the new system however, one child could consume almost my entire revenue stream. I can’t go to a bank with my middle-class income and say hey lend me 170k for my hobby now can I? I have to be able to show them that I have at least some hope of recouping before they will even talk to me. As much as I enjoy my little hobby I just don’t think I can keep doing it without some means of paying for it.

My system is perfectly free-market. People who do not have children and who do not consume the labor of adults who were once children pay absolutely nothing. People who do need the labor of adults can compensate the parents for the time and resources that the parents expended creating the adult. Its perfectly fair. Everyone pays for what they get.

Likely others have made the following points….if so, forgive my repetitiveness.

-Isn’t parenting a noble endeavor? What value the creation of an adjusted fully-functioning human being?

-Isn’t it reasonable for renumeration to come from the individual who recieves the benefit most directly (ie the child)? The grown-child has received the greatest benefit and logically would be the one (if any) to provide renumeration. The idividuals of society receive benefit (or detriment) in only tiny and immeasurable differentials.

(Actually I think the last social-familal-contract has some strong natural capitalistic underpinnings to recommend it.)

Shannon — Given that you’re essentially admitting that you’re annoyed by (many) non-breeders and were motivated in these postings by a desire to tweak back, why continue to act as though it’s all about some strict lab-style economic thought-problem?

Which is a fairly ludicrous one anyway. Do you really think that costs can be totaled up in this simple a way? Just to stick to money, here’s another thing you aren’t taking into account. Let’s say that Nonbreeder saves all that money he doesn’t spend on having kids. It gets to be quite a tidy sum. What happens to that money when Nonbreeder dies? It all gets passed along to the next generation in one form or another. Perfectly possible to say that, instead of freeloading on the expenses of Breeders, Nonbreeder has selflessly made a considerable gift to all those children he didn’t have. Oops, I forgot to add the fact that, while alive, if he’s saving that money and not spending it, Nonbreeder isn’t getting any utility out of it, while Breeder is at least getting some kids for all his expenses. Quite a selfless guy, as far as I can tell, and deserving of admiration.

Look, if nonbreeders can be obnoxious, and they certainly can be, so can breeders. Do you have no idea how sanctimonious and self-righteous breeders can be? (Hint: check out many of the comments on your two postings. Some commenter-parents are A) under the impression that they’re raising their kids for the general good of mankind, and B) under the impression that people without kids are either evil or to be pitied. Good lord, have you met no selfish parents?) Why not make the assumption that all people (a few psychopaths aside) are making their own kind of contribution to the general flow of things, that this is generally a Good Thing, that the world and the species need all kinds of input and contributions, and that variety is nice. And why not do what you can to encourage mutual respect instead of mutual hostility? Breeders and nonbreeders are all pitching in, and probably all with about the same mixture of self-interest and generosity.

Er, you might want to consider whether you have enough money *before* you begin an expensive undertaking, like a responsible adult.

“Children don’t send home checks anymore.”

Hey, if you didn’t raise your kids to follow one of God’s Top Ten, don’t blame me.

“I just ask to be paid for the time and resources invested in the product.”

If nobody finds your product to be worth it (or finds other people’s products to be cheaper, as they will given that this goofy suggestion is unique to you), then you can ask to be paid, with the same results as when you summon spirits from the vasty deep.

“You expect me to spend hundreds of thousands of dollars, a minimum of 157,000 man hours and commit for a minimum of 18 years and to then give away the product of all that work for free?”

“Given that you’re essentially admitting that you’re annoyed by (many) non-breeders and were motivated in these postings by a desire to tweak back, why continue to act as though it’s all about some strict lab-style economic thought-problem?”

Indeed. That’s what I was alluding to when I compared Shannon’s protestations that “free rider” was not at all pejorative with Ray Nagin’s protestations that “chocolate city” was not at all racist. Everything I’ve seen since then simply confirms that initial impression.

“Breeder is at least getting some kids for all his expenses”

This is the fundamental reason why “free rider” analysis is simply inapplicable to this situation — the kids are the *parents’* kids, not a communal resource. If parents had to pay for the maintenance of children while they lived in some Spartan barracks under communal control, the situation *would* be a free rider problem (only certain people have to pay, but everybody gets the same reward).

(As I noted earlier, Shannon’s attempt to separate monetary and non-monetary rewards and ignore the latter leads to a reductio ad absurdum in which all sorts of ordinary things become “free rider problems”. For example, most cultural expression would die off if only people who were confident of turning a profit created art and literature.)

But that’s not reductio ad absurdium; that’s just what a free rider problem IS. It’s any circumstance in which there’s incentive to avoid bearing particular costs even though you can still reap the benefits.

The museum I work at has free nights. This results in a “free rider problem”. It just so happens that this particular free rider problem has been intentionally created because we *want* people to share in the benefits of the museum.

Despite your continued attempts to discard the child-bearing free rider problem, it’s still there. That doesn’t necessarily mean anything should be done about it; it only means that there’s a situation in which people have an incentive NOT to bear the costs of raising children while still sharing in the benefits from others having raised children.

Shannon thinks the problem is significant enough that we might be nearing the time to change public policy (by eliminating socialist programs) so that the next generation doesn’t shrink too much compared to this one. I’m not convinced, in large part because I expect the country to continue to import labor. I think we need to eliminate socialist programs because they’re STUPID, but I don’t think the effect on childbearing is significant enough to worry about at present.

I think your analysis is pretty close to the mark, but you are ignoring the benefits to the parents of having children. Even so, the *economic* benefits are much less than they used to be due to the fact that we don’t all live on farms any more, and the costs have been increased, as you say, by collectivism.

The primary reasons I have chosen so far not to have children are because I am currently renting while I wait for the housing market to return to a realistic price level (a cost of currency debasement) and that I will not have kids until I know I will not have to put them through the school system. That means I have to figure out what it takes in the state of California to home school. Even then there are still risks that the laws will change and CA will become like NY and take my kids away from me because I don’t properly indoctrinate them into statism. If it weren’t for those factors, I’d have ten kids already. Well, maybe just three or four.

Whatever else this topic as churned up, it has certainly churned up the most prevalent failing of economics as a science, the variable of human emotion in the mathmatical equation.

Markets are not rational and people’s decisions regarding child rearing are not rational. They are weighted with ignorance and bias and enthusiasms unrestrained.

And so I do not find your thesis offensive in and of itself, I find your arrogance in putting forth your thesis offensive, in that it assumes that you can measure so many variables you most surely cannot.

Your science would be served greatly by humble toil, as would many others.

I find your arrogance in putting forth your thesis offensive, in that it assumes that you can measure so many variables you most surely cannot.

And yet the empirical evidence supports my thesis. As the economic return of children decreased to near zero and the cost of rearing children climbs, people choose to have fewer children. This is exactly what any one with even a basic understanding of market forces would expect to happen.

I have never asserted that non-economic forces do not play a role in peoples decisions. In fact, had you read carefully, you have seen that I assert that non-economic forces are the only reason that people continue to rear children! This is what creates the free-rider problem in the first place.

My thesis isn’t “arrogant” at all. I don’t have to measure all the variables, I merely need to measure the controlling variables and this I have done. The existence of the free-rider dynamic will eventually swamp all other considerations so I can ignore them. If you have a counter-example, I would love to see it.

What really amazes me is that so many of the childless are so blind to their own enlightened self-interest. You are going to need the labor of today’s child as tomorrow’s adult. Why would you bet you own future on the idea that others will make huge economic sacrifices to make it so?

In one breath you state that “As the economic return of children decreased to near zero and the cost of rearing children climbs, people choose to have fewer children.”

In the next breath you state
“What really amazes me is that so many of the childless are so blind to their own enlightened self-interest. You are going to need the labor of today’s child as tomorrow’s adult. ”

So which is it, do we derive economic benefit or not?

Are you so arrogant to think that “Freeriders” cannot see the “enlightened self interest”.

I think you oversimplify the issue and therefore will never come to a correct statement of the problem, which means that you will never be able to solve the problem.

Much like economists oversimplify market dynamics by placing them in a “rational markets” paradigm, forever damning themselves to ltcm like blow outs.

The free rider dynamic cannot swamp all other variables or the human race would have died out. It is a cycle of ever changing leaders, dynamic societal forces presses on different populations, forcing them to become more efficient, then as thier efficiencies create abundance they become more lax, and lose thier margin of efficiency which created the abundance and the cycle repeats.

I do not think it is a zero sum cycle though, each cycle builds on a foundation created by the previous and so various societies advance through history.

I think it’s important to separate out the monetary costs of activities that increase the economic potential of a child and those that simply increase their quality of life. For example, if parents take their children to Disneyland that is a monetary cost that does not increase the economic potential of their children (at least not substantially). Providing education for children increases their economic potential and benefits society as a whole.

Monetary costs associated with feeding, clothing and providing shelter do increase the economic potential of a child to the extent that it keeps them alive. However, a discussion on the free rider effect should only address costs related to the provision of a bare minimum of these essentials. I’d argue that buying your kids designer clothes, eating out a fancy restaurants and living in posh neighbourhoods largely improves the quality of childrens lives and by extension the non-economic value derived by their parents who should bear all of those costs.

You make a valid point. The USDA figures I referenced are supposed to largely concerned with basic necessities of food, clothing, shelter etc. but I don’t know the details. On the flip side, the time that parents spend is also not accounted for anywhere.

From the purely economic perspective, a good way to think of the problem would be to ask, “How much would it cost to contract somebody to raise up a child into a middle-class productive adult?” I think the cost would be considerable to say the least.

After doing a quick google search I came across a news release that has childrearing costs for a low-income family at about 73% of costs for a middle-income family. If we’re trying to determine costs of raising a child AND we assume that low-income family can raise their children just as competently as middle or upper-income families (which, in order to avoid a much larger discussion I will), I’d say the low-income childrearing costs are a good baseline.

While I agree with the principle of the free rider problem, I have some nits to pick with the use of the USDA numbers as I don’t feel they completely reflect the marginal cost of childrearing.

First of the report clearly states the “USDA uses the per capita method to allocate expenses
on housing, transportation, and miscellaneous
goods and services in equal proportions among household members.”

Secondly, one could argue that some child specific costs they measure such as daycare tuition do provide measurable economic/monetary benefit to the parents. This is a big topic of debate here in Canada where some political parties want to implement national institutionalized day care whereas another party wants to provide a flat per child payment and allow parents to decide how to spend that money.

Well, remember that what I am actually interested in is the productivity of the adult as a child. The REAL cost analysis that I would like to see would be one that matches the cost of raising a child into an adult and that adults income.

I would bet that middle-class families provide a better rate of return poor families.

How about an auction where potential parents bid an amount that they would have to be paid in order to have a child?

Each year the desirable number of new babies could be determined, based on the replacement rate. I’ll use 3 million babies per year as an example. Parents would submit bids based on what they would like to get paid and whatever the market clearing price is, all parents are paid that amount. So, say if the 3 millionth set of parents submits a price of $110,000 all parents would receive that amount. The economics behind using the marginal price as opposed to paying each persons bid amount is found in many auctions, such as electricity spot markets (which I’m most familiar with).

This would capture the differing non-economic/monetary value that people put into having children as those who derive a higher non-monetary value would presumably submit a lower bid, and those who are only reproducing for the money would submit a bid close to what they think would be their total costs plus a rate of return.

you seem to be under the mistaken belief that a) we are running out of humans, and b) that would be a Bad Thing. Simply put, there will be more resources available from an economic standpoint when there are fewer people to consume them. NTM, in addition to their being fewer consumers, there would be fewer suppliers needed. Supply vs. Demand. You seem to think that there is some demand for more kids. Perhaps those that feel there is a demand for them should be the ones supplying them. Oh, wait, they already are.
Those of us that do not supply children contribute in numerous other ways to the economy. In addition to paying taxes. There are economic benefits to having children, as I was informed when I attempted to have myself removed from my mother’s income tax returns and was refused. There are government services available to families that are never EVER offered to non-childed singles and couples. Please refrain from further comments of topics you seem to know nothing about. Thank you.

Simply put, there will be more resources available from an economic standpoint when there are fewer people to consume them

This is incorrect. ALL resources exist because of human action. The ONLY natural resource is the human mind. The more people the more resources.

Those of us that do not supply children contribute in numerous other ways to the economy.

Yes you do but you also will benefit enormously from time and money that parents invest in their children when those children grow up to be net producers. More importantly for the free-rider problem, any individual will receive the same level of economic benefit from the next generation as parents even though you will pay substantially less.

I am not saying that government and even private subsidies do not reduce the cost of having children but they do make it anywhere near a break even proposition compared to the alternative.

Remember, children are not the goal. A child is merely the production phase of the productive adult. Right now we have no market mechanism for insuring that enough future adults will exist and socialized subsidies are a mixed blessing at best.

Isn’t this (hoary) topic leading us into the decline of civilization Shannon?

Ex: We only need one person in a thousand to understand how to produce electricity for us to all go about our daily business. What happens when only one in 10 million understand? (Social dislocation, foreign dependence, market disruptions I imagine.) You’re right that this is the general trend.

It also occurs to me in these posts that you don’t give much credence to the independent spirit. I think, even as a geezer, I can take care of me and mine – often in cooperation with others of similar independence. As a practical matter I think you overestimate the “need” for economic benefit derived from “new blood” especially in the doghoouse social reality of this county, now.

Your question really is “how to reverse the trend?” isn’t it? IMO, a bird-flu/black plague like epedemic, or maybe mideast-like conflagration gone out of control offer the most likely way this will get changed. You may be more optimistic than I, however, so post on.

“More importantly for the free-rider problem, any individual will receive the same level of economic benefit from the next generation as parents even though you will pay substantially less.”

I’m not familiar with the world where a typical person is going to bust his butt to help J. Random Stranger out of a financial jam as readily as he will do so for Mommy and Daddy. What color is the sky there?

While you might want to limit your discussion to the economic consequences, the non-economic effects of your suggestion cannot be ignored. What, exactly, is the benefit to society of a generation being raised by parents who have been pressured, guilted, or bullied ino parenting? If it is not something one nautally wants to do, it is of no benefit to society to do it, since raising children is an emotional, not just an economic endavor.

While you might want to limit your discussion to the economic consequences, the non-economic effects of your suggestion cannot be ignored. What, exactly, is the benefit to society of a generation being raised by parents who have been pressured, guilted, or bullied ino parenting? If it is not something one nautally wants to do, it is of no benefit to society to do it, since raising children is an emotional, not just an economic endavor.

What, exactly, is the benefit to society of a generation being raised by parents who have been pressured, guilted, or bullied ino parenting?

I don’t think there would be any benefit and I never advocated doing anything like that. I merely pointed out that (1) society needs children (2) people who do not raise children share in the same economic rewards as parents (3) people who choose to become parents must assume a huge burden and that the free-market does nothing to alleviate this burden.

They may not teach this at Harvard but the first step in understanding someone’s argument is to read what they actually wrote and not to slap your own stereotype based interpretation onto it.